5 Financial Blunders You Need to Stop Making
Financial hardship isn’t something that happens over the course of a few days. It takes months, sometimes years of poor financial decisions that eventually snowball into major money issues. The good news is that no matter how badly off you are financially, there’s always a chance for you to make better decisions that will improve your economic situation.
As once said by Benjamin Franklin, “An investment in knowledge pays the best interest.” Here are the top five financial blunders you need to stop making, and ways that you can correct each of these mistakes.
- Frivolous Spending
Consistently spending money on things you don’t need will have an impact on your bank account. While it may seem like no big deal to buy that frappe from Starbucks each morning or to go out to dinner twice a week, the fact is that these small purchases add up.
Consider this. Spending an extra $50 a week adds up to an extra $2,600 spent each year. That’s money that you could have saved, put towards retirement, or used to pay down debt.
We live in a world of impulse buying and plastic spending. Swiping a card is convenient, but it’s thought-less. Imagine how carefully you’d spend your money if you only paid in cash!
If you’re finding that you’re living paycheck to paycheck or lacking money to save, take a look at your spending habits and see where you can start to make changes.
- Not Having a Budget
Without a budget it’s all too easy to spend money without thinking twice. Not having a budget also makes it impossible to meet any kind of financial goal. By taking the time to create a budget and to find ways to trim your expenses while maximizing your income, you’ll find that you’re able to stretch your hard-earned dollars even further.
Creating a budget is simple. The basic steps include:
- Writing down your monthly income
- Writing down your monthly expenses
- Figuring out what money is leftover
- Having a plan for leftover funds
With a budget you can see where your money is going and then determine where it should be going. What’s nice about a budget is that you can use it to achieve any monetary goal. Maybe you want to save more, pay down debt, or retire before the age of 55.
By knowing what money you have coming in and where it’s going, you can make smarter money decisions.
- Paying for Services You Don’t Need
There are certain expenses that we all have to face each month. Insurance, groceries, and living expenses are non-negotiable. But, if you’re like most people, you also have other monthly costs that you may not need.
Do you really need Netflix, Hulu, and cable television? How often do you read the magazines that you pay for each month? When’s the last time you went to the gym to make good use of the monthly pass you’ve purchased?
Write down all of your monthly expenses and then consider whether or not the cost is worth the entertainment. Monthly entertainment services can easily be costing you hundreds of dollars a month. Cancel any services that you no longer need so that you have more money to save.
- Not Seeking Financial Help
If you’re between a rock and a hard place financially, one of the best things you can do is to seek financial help. This doesn’t necessarily mean go out and apply for a loan. What it does mean is talking to a financial advisor that can help you with your financial goals.
Unsure of where to find a financial advisor in your area? Most banks and credit unions offer financial advisors to their members. You can also compare financial advisors in Miami on Carefulcents.com.
What’s nice about a financial advisor is that they can guide you and help you grow your money. Something as simple as moving funds into a CD can lead to hundreds of dollars in growth.
- Living on Borrowed Money
Having a credit card or two is good. In fact, having one is a must if you want to build your credit score and credit history. The problem begins when you’re living on borrowed money. Credit cards are only beneficial if you’re paying off the money you’ve borrowed each month. Otherwise, you’re paying interest on a purchase, which makes it even more expensive.
Credit card debt continues to grow. In fact, in 2019, the average credit card balance in the U.S. is $5,331. To make matters worse, around 55% of Americans don’t pay their monthly minimum payment in full.
Having revolving credit card debt not only leaves you in a financial bind, but it can also have a serious impact on your credit score.
We all make financial mistakes and silly spending decisions. But, if your financial habits have caused you money problems, now is the time to wise up and to create a plan to do better. Life is a lot less hectic when you aren’t bogged down by debt or struggling to make ends meet!